TMI Blog2016 (8) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... not accept the service as it was claimed before this Tribunal. Therefore, there is an obligation on the part of the assessee-company to maintain good quality of signal/data to be retransmitted so that Videsh Sanchar Nigam Ltd. or other companies which may redistribute the signal to their respective customers. Therefore, this Tribunal is of the considered opinion that it is obligation on the part of the assessee to maintain the quality of signal/data which was retransmitted. If the assessee-company dismantled the equipment/ machinery installed at Chandigarh and Chennai in the year 2004, it is not known how the assessee is testing the quality of signal retransmitted to India. The so-called earth station maintained by Videsh Sanchar Nigam Ltd. and other companies in India may be downlinking the signal/data from the satellite. The question arises for consideration is whether the earth station said to be maintained by Videsh Sanchar Nigam Ltd. and other companies could receive signal/data without any intervention by the assessee-company in India. This fact was not examined by both the authorities below. Further, how the signals were received in India without intervention of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y provides transponder capacity installed on satellite. According to the learned representative, telecasting companies/telecom operators uplink their data to the satellite owned by the assessee. The data/signal received by the satellite would be received back by the earth stations in down linking process from where the telecasting facility is provided to customers of the telecasting companies/ telecom operators. According to the learned representative, the assessee- company entered into an agreement for providing transmission capacity so as to enable the telecasting companies/telecom operators from India to uplink and downlink the programmes which are to be telecasted. Referring to the copy of the agreement said to be entered into with Videsh Sanchar Nigam Ltd. (VSNL), the learned representative submitted that the assessee has no permanent establishment in India. The assessee is not providing any services in India. The satellite was stationed in the orbit. The Indian telecasting companies/telecom operators upload their respective signals to the transponder provided by the assessee and they will also downlink the signals for the purpose of distributing to their respective customers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has a permanent establishment in India. According to the learned representative, since the assessee has no permanent establishment is in India, no portion of the assessee's income can be attributable to the group company's equipment which was said to be installed at Chandigarh and Chennai up to the year 2004. The satellite operation was carried out from outside India only. The assessee has not rendered any service in the territorial jurisdiction of India. According to the learned representative, the concept of permanent establishment would override the assertions made by the assessee regarding the business connection in India. 5. The equipment said to be installed at Chandigarh and Chennai are different from an earth station. According to the learned representative, communication system monitoring equipment was owned by the assessee's associated enterprise, viz., Intelsat Global Service Corporation, USA, whereas the earth stations are owned, operated and maintained by Videsh Sanchar Nigam Ltd. The assessee has not owned any earth station in India. The basic function of communication system monitoring equipment or the earth station as the case may be, it shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned representative further submitted that the payment made by the assessee cannot be construed to be a payment as fee for technical services . According to the learned representative, the services rendered by the assessee-company is a standard service, therefore, it does not qualify as fee for technical services. The learned representative placed his reliance on the judgment of the Madras High Court in the case of Skycell Communications Ltd v. Deputy CIT [2001] 251 ITR 53 (Mad). Moreover, the technology was not made available to anyone by the assessee, therefore, the services rendered by the assessee even if it is considered to be a technical service, is not liable for taxation. According to the learned representative, the assessee has to necessarily make available the technology to Videsh Sanchar Nigam Ltd. for the purpose of treating the payment as fee for technical services . Other than providing transponder for downlinking data/signal by Videsh Sanchar Nigam Ltd., the assessee was not rendering any service. In fact, the system in-built in the transponder process the signal/data received from Videsh Sanchar Nigam Ltd. and the same was retransmitted not only to India but also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art from the business connection, some activities needs to be carried on by the assessee in India then only a portion of the income which is attributable to the activity carried on by the assessee in India is liable for taxation. The learned representative placed his reliance on the judgment of the apex court in the case of Ishikawajima-Harima Heavy Industries Ltd v. DIT [2007] 288 ITR 408 (SC). 11. Referring to the services rendered by the assessee, the learned representative submitted that the company provides satellite capacity via space segment and related services to the distributors in accordance with the terms of the agreement. According to the learned representative, the agreement said to be entered into between the assessee and Videsh Sanchar Nigam Ltd. is available on record. Referring to clause (4) of the Agreement, the learned representative submitted that the assessee authorises the distributor on a non-exclusive basis, for so long as the agreement remains in effect, to procure from the company satellite capacity via the space segment and related services pursuant to a service contract for services in accordance with the ordering procedures. According to the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... telecom service providers for providing transponder capacity so as to enable them to uplink and downlink the programmes to be telecasted. For the purpose of maintaining the quality of the signal received in India, the assessee has maintained an equipment at Chandigarh and Chennai. The assessee now claims before this Tribunal that the equipment installed at Chandigarh and Chennai do not belong to it and in fact it was installed and maintained by an associated concern. The fact remains that the equipment installed at Chandigarh and Chennai is to test the signal/data received in India which was retransmitted by the assessee. Therefore, according to the learned Departmental representative, to test the quality of signal which was down linked by the assessee an equipment was installed and the assessee is admittedly as claimed before this Tribunal maintaining the same through its associated concern. Therefore, according to the learned Departmental representative, the assessee is having a permanent establishment in India. According to the learned Departmental representative, the equipment installed and maintained in India for the purpose of testing the quality of signal received in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respective companies/operators in India. The question arises for consideration is when the assessee receives signal/data transmitted by the companies in India and process the same through transponder/satellite owned by the assessee which are situated in the orbit whether the assessee is rendering any service in India ? If the assessee is maintaining satellite in the orbit and Indian companies are uploading the signal/data which was received by the satellite and transmitted to India then the assessee may not be rendering any service in India. In this case, the admitted fact is that the assessee is maintaining equipment at Chandigarh and Chennai for the purpose of testing the quality of signal. The very object of the agreement between the assessee and Videsh Sanchar Nigam Ltd. is to uplink and downlink the signal and the assessee has to maintain proper quality of the signal which was transmitted to India or to the earth station. The assessee now claims that the equipment installed in India at Chandigarh and Chennai does not belong to it and it is owned by its associated enterprise. The fact remains that the equipment maintained at Chandigarh and Chennai is for the purpose of tes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained by Videsh Sanchar Nigam Ltd. and other companies could receive signal/data without any intervention by the assessee-company in India. This fact was not examined by both the authorities below. Further, how the signals were received in India without intervention of the assessee-company needs to be examined. This Tribunal is of the considered opinion that the technical experts from Videsh Sanchar Nigam Ltd. or very any other companies which entered into agreement with the assessee- company needs to be examined about the mode of receipt of signal/data which was retransmitted by the assessee-company in India. Since the Assessing Officer has not examined the technical experts, this Tribunal is of the considered opinion that to appreciate the real services rendered by the assessee, the matter needs to be reexamined by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall reexamine the matter afresh after examining the technical experts from Videsh Sanchar Nigam Ltd. who is responsible for maintaining the earth station in India or any other comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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